Critical Review: Newfield Exploration (NFX) versus Diamondback Energy (FANG)
Newfield Exploration (NYSE: NFX) and Diamondback Energy (NASDAQ:FANG) are both mid-cap oils/energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, earnings, risk, dividends and valuation.
Institutional and Insider Ownership
99.2% of Newfield Exploration shares are held by institutional investors. 0.5% of Newfield Exploration shares are held by company insiders. Comparatively, 0.4% of Diamondback Energy shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
This is a breakdown of recent ratings and target prices for Newfield Exploration and Diamondback Energy, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Newfield Exploration currently has a consensus target price of $40.81, indicating a potential upside of 37.54%. Diamondback Energy has a consensus target price of $120.90, indicating a potential upside of 23.42%. Given Newfield Exploration’s higher probable upside, analysts clearly believe Newfield Exploration is more favorable than Diamondback Energy.
This table compares Newfield Exploration and Diamondback Energy’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Volatility and Risk
Newfield Exploration has a beta of 1.49, suggesting that its share price is 49% more volatile than the S&P 500. Comparatively, Diamondback Energy has a beta of 1.08, suggesting that its share price is 8% more volatile than the S&P 500.
Earnings & Valuation
This table compares Newfield Exploration and Diamondback Energy’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Newfield Exploration||$1.63 billion||3.63||$903.00 million||$1.53||19.39|
|Diamondback Energy||$829.62 million||11.59||$676.65 million||$3.36||29.15|
Newfield Exploration has higher revenue and earnings than Diamondback Energy. Newfield Exploration is trading at a lower price-to-earnings ratio than Diamondback Energy, indicating that it is currently the more affordable of the two stocks.
Newfield Exploration beats Diamondback Energy on 8 of the 13 factors compared between the two stocks.
About Newfield Exploration
Newfield Exploration Company is an independent exploration and production company. It is engaged in the exploration, development and production of crude oil, natural gas and natural gas liquids. Its operating segments are the United States and China. Its the United States operations are onshore and focus primarily on large scale, liquids resource plays. Its principal areas of operation are the Anadarko and Arkoma basins of Oklahoma, the Williston Basin of North Dakota and the Uinta Basin of Utah. It has oil producing assets offshore China. As of December 31, 2016, its proved reserves of 513 million barrels of oil equivalents (MMBOE) consisted of 304 MMBOE proved developed producing, 10 MMBOE proved developed non-producing and 199 MMBOE proved undeveloped reserves. As of December 31, 2016, its proved liquids reserves were 285 million barrels of crude oil or other liquid hydrocarbons. As of December 31, 2016, 67% of its proved liquids reserves were crude oil or condensate.
About Diamondback Energy
Diamondback Energy, Inc. is an independent oil and natural gas company. The Company focuses on the acquisition, development, exploration and exploitation of unconventional onshore oil and natural gas reserves in the Permian Basin in West Texas. As of December 31, 2016, the Company’s total net acreage position in the Permian Basin was approximately 105,894 net acres. As of December 31, 2016, the Company, through its subsidiary, Viper Energy Partners LP (Viper), owned mineral interests underlying approximately 107,568 gross acres primarily in Midland County, Texas in the Permian Basin. The Permian Basin area covers a portion of western Texas and eastern New Mexico. The Company’s reserves are located in the Permian Basin of West Texas, in particular in the Clearfork, Spraberry, Wolfcamp, Cline, Strawn and Atoka formations. The Company refers to the Clearfork, Spraberry, Wolfcamp, Strawn and Atoka formations collectively as the Wolfberry play.
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